In the last two weeks the rebate level for the California Solar Initiative (CSI) rebate program dropped for customers of PG&E from $1.10 to $0.65. This is great news because the rebate reduction is triggered by more people deciding to go solar. The thinking behind this planned reduction in rebates was driven by the assumption that the price of solar panels would fall and in turn reduce the need for a high rebate to make solar affordable.

As predicted, solar panel prices have markedly decreased over the past two years with more price reductions expected. While the 40% PG&E rebate reduction sounds like a lot, the overall cost of a home solar power system has only increased by around 8% which adds less than a year to the payback period. The reason for the minimal increase is because the 30% federal tax credit, which is calculated after the state rebate is deducted, makes up for most of the state rebate reduction. Even with the decreasing rebates many Californians are not phased. Mark Bachman from Auriga USA reports that applications for the CSI rebate for 2010 have already outpaced 2009 numbers by 91%.

So where are solar prices headed? Well most analysts agree that we are in for further price cuts for solar panels in the next few years. However, panels are only one factor, you still need to consider the installation cost and until there is a more efficient method for mounting and connecting a solar power system to your house, this cost will remain fixed. Remember, while price is definitely a major factor in deciding whether to go solar, there are many other factors to consider. If you’re interested in finding out whether solar makes sense for you, we can put you in touch with qualified local installers who can provide you with tailored, no obligation quotes. You could be paying less for clean energy sooner than you think.

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Residential Solar 101 is dedicated to educating homeowners and renters about solar power options. We believe that the economic argument for solar is just as compelling as the environmental one and that everyone can save money and the environment at the same time.